JINDAL PHOTO FILMS LIMITED Vs. DEPUTY CIT

JUDGEMENT

(1.) THIS common order shall govern the disposal of three writ petitions between the same parties and arising out of a common set of facts and events.

(2.) THE petitioner is a public limited company engaged in the business of manufacturing of photosensitive film and is a regular income -tax assessee since long. It commenced several industrial units, one of which is located at an industrially backward area of Bhimtal in Nainital District of the State of U. P. The unit was engaged in manufacturing of colour roll films. Prior to the asst. year 1991 -92, the assessee had claimed investment allowance under S. 32A of the IT Act, 1961, on the machines installed for production of colour film rolls for the period relevant to the asst. year 1990 -91. This claim of the petitioner was disallowed by the AO on the ground that manufacture of colour film rolls was not entitled to investment allowance because such an article was included in the prohibited list mentioned in the Eleventh Schedule to the INCOME TAX ACT, 1961. In the said list, at serial No. 10 of the articles mentioned are : "Photographic apparatus and goods". The cinematographic films were also included in this list at serial No. 9. Vide Finance Act, 1988, the Government decided to withdraw cinematographic films from this Schedule because these films were used for manufacturing educational and tourism documentaries. However, photographic apparatus and goods which included photographic films were not excluded and remained in this list. Hence, the AO disallowed the claim of the petitioner for investment allowance under S. 32A of the Act for the asst. year 1990 -91. The return of income for 1991 -92 was filed on 31st Dec., 1991. In this return, the petitioner did not claim any deduction under S. 80 -I of the Act. Similarly, for the asst. yrs. 1992 -93 and 1993 -94, in the original return the petitioner had not claimed any deduction under S. 80 -I of the Act. The CIT (A) while dealing with the appeal relevant to the asst. year 1990 -91 in his order dt. 28th Feb., 1994, made an observation that after exclusion of the term cinematographic films from entry No. 9, there was no justification for holding that the colour film rolls were included in the Eleventh Schedule. The CIT (A) held :

(3.) ACCORDING to the respondents, the AO while examining the record for the assessee for all the three years found that deduction under S. 80 -I of the Act had been wrongly allowed in the assessments. The assessments were completed by merely following the order of the CIT (A) passed on 28th Feb., 1994, relevant to the asst. year 1990 -91 which were not binding on the AO for the subsequent years. The observations of the CIT (A) were totally against the provisions of the Act. The photographic apparatus includes camera, etc., and photographic goods include colour film rolls, etc., and the intention of the legislature is clear that the manufacture of these articles is not entitled to the deduction. Removal of cinematographic films is to confer eligibility for deduction on educational and tourism documentary films. Looking to this fact and taking the view that income had escaped assessment notices under S. 148 were issued. It was submitted that it was not a case of mere change of opinion particularly in view of the amendment made in S. 147 of the Act w.e.f. 1st April, 1989.